Chinese Travel Back With a Boom in Golden Week
Despite the resurgence in travel numbers, there's a growing trend for young Chinese travelers to avoid pricey boutiques and head to free, social-media friendly locations instead.
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The early indications are that this is a hot "Golden Week" in China, both literally and figuratively, with extensive travel despite gloomy consumer sentiment and a tepid outlook for the economy.
It's pushing 95°F here in Hong Kong and southern China, so it still feels like summer. And travelers have been making the most it. China as a whole is reporting numbers that show domestic travel sales more than doubled compared with last year (up 125% to US$48 billion), while the number of trips is up 76% to 395 million, giving a boost to retailers, restaurants and transport providers.
The benefits spill beyond China's borders, too. Thailand, the top international destination for Chinese travelers pre-Covid, has temporarily waived the need for mainland visitors to get a visa. The government said over the weekend that more than 22,000 Chinese travelers arrived in the first two days after the waiver went into effect on September 25, with the visa moratorium running through February. The government anticipates that Thailand will get an economic benefit to the tune of 140.3 billion Thai baht (US$3.8 billion), adding that around 650,000 mainlanders have booked trips to Thailand in October.
The sunny numbers didn't help the online travel agency Trip.com (HK:9961) TCOM in Wednesday's trading. It plunged 3.8% in Hong Kong, although that wasn't quite as bad as its 4.9% descent on Wall Street the day before. As a Nasdaq tech stock as well as a China play, it's experiencing a double dose of pessimism about those prospects in an era of "higher for longer" interest rates.
With mainland Chinese markets closed for the week surrounding China's national day on October 1, it's on the Hong Kong Stock Exchange that we see views on Chinese stocks expressed. And that hasn't been pretty. There have been two days of descent after Hong Kong honored the Mid-Autumn Festival on Monday, but the stock market has set a new low for the year at each close. The Hang Seng Index fell 0.8% Wednesday, leaving it down 14.6% year to date.
I highlighted last week that Japan will also be a big beneficiary as outbound Chinese travel returns. I'm recommending the largest Japanese air carrier, ANA Holdings (T:9202) ALNPY as a result. So far, it has fallen alongside Asian markets in general, although ANA (down 1.8%) did better today than the broad-market Topix index (down 2.5%).
Domestically, there are forecast to be 190 million railway trips within China as well as 21 million air journeys. Fliggy, the online travel site from Alibaba Group Holding (HK:9988) BABA , says there were six times the number of domestic bookings made this year vs. last year, when China was still laboring under the highly disruptive campaign to eliminate Covid. Fliggy says international travel bookings are 20 times the figure from 2022, when it was virtually impossible for Chinese travelers to leave the country.
The elasticated rebound in travel over the Golden Week reflects the fact that Chinese travelers have now had time to plan trips after the better part of three years stuck in place. The anti-Covid rules restricting travel were suddenly lifted last December, and it's taken time to book long-delayed journeys. But the longer-term economic prospects for China and Asia in general are cooling.
The World Bank has just downgraded its forecast for growth in developing Asia to 4.5% for next year, down from its 4.8% forecast in April, which would be the slowest pace in 50 years. Similarly, prospects for economic growth in China have shrunk to 4.4% growth in 2024, down from the 4.8% it projected in April.
There's been an uptick in travel for younger Chinese, but they're increasingly looking to do that on a budget. The stereotypical idea of a Chinese tourist descending on boutiques on the Champs-Élysées to buy Birkin bags is being replaced by travelers in their 20s taking to social media to post selfies in Instagrammable spots and swap stories on how to extend a shoestring budget.
Some Chinese college students and young professionals dub themselves "special-forces" travelers, willing to rough it a little to work their way through a packed but no-frills schedule. We're seeing it here in Hong Kong, where the Kennedy Town waterfront that gets the golden afternoon light is crammed with visitors taking turns to photograph themselves and their friends.
That may mean the most-optimistic predictions for the return of international Chinese travelers miss the mark. The consulting firm Oliver Wyman surveyed Chinese citizens about their plans, and found that close to 40% said they will wait two years before traveling overseas again.
